Goals and consequences of not achieving

Question 1

Strong and sustainable economic growth

Answer 1

The rat at which economic activity is increasing such that it is strong enough to drive employment growth and sustainable so that it doesnt create excessive inflation, external and environmental pressures (3-3.5%)

Question 2

If economic growth is below 3%

Answer 2

Unemployment, Reduced real income growth due to increased spare capacity creating comp in labor market and downwards pressure on wages, reduced ability of government to provide essential services

Question 3

If economic growth is above 3%

Answer 3

inflation due to close to productive capacity, external and environmental pressures

Question 4

Goal of full employment

Answer 4

The level of unemployment that exists when the governments economic growth goal is achieved and cyclical employment is non existent, (4-4.5%)

Question 5

If unemployment is above 4.5%

Answer 5

Higher chance of giving up on seeking work, loss of potential output, expenses to federal budget

Question 6

If unemployment is below 4%

Answer 6

Inflationary pressures due to increased demand inflation

Question 7

Goal of low and stable inflation

Answer 7

to achieve a sustained increase in the general level of prices between 2-3% on average over the medium term

Question 8

headline vs underlying

Answer 8

headline is all goods and services in the cpi wheras underlying removes volatile items

Question 9

If inflation is above 3%

Answer 9

Erodes purchasing power, wage price spiral, lower ROI, reduced international comp

Question 10

If inflation is below 2%

Answer 10

increased unemployment due to lower production